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Monthly Archives: October 2014

Courts are now seeming to favor homeowners in cases of what is called “business records” and the “custodian” of the records, where the foreclosing bank cannot present a witness who qualifies as a custodian of the business records concerning lack of payment by the homeowner.

Under Florida Rule of Civil Procedure 90.803(^) a hearsay exception exists for Records of Regularly Conducted Business Activity, as follows:

(a) A memorandum, report, record, or data compilation, in any form, of acts, events, conditions, opinion, or diagnosis, made at or near the time by, or from information transmitted by, a person with knowledge, if kept in the course of a regularly conducted business activity and if it was the regular practice of that business activity to make such memorandum, report, record, or data compilation, all as shown by the testimony of the custodian or other qualified witness, or as shown by a certification or declaration that complies with paragraph (c) and s. 90.902(11), unless the sources of information or other circumstances show lack of trustworthiness. The term “business” as used in this paragraph includes a business, institution, association, profession, occupation, and calling of every kind, whether or not conducted for profit.

As mortgages are regularly assigned between banks, often more than once, the lawyers for the assignee banks have been instructing these witnesses chosen specifically to testify on the issue as to what to say. These witnesses have no personal knowledge of how the records were kept by the previous bank, and are therefore called “Robo-Witnesses'”, similar to “Rob-Signing” where bank lawyers were notarizing documents without the presence of the person whose signature was being notarized (an illegal act).

Witnesses in these cases as the custodian of the records should have first hand knowledge of the accuracy and origin of the business records concerning the mortgage, the note, and the foreclosure
Recent decisions have also indicated a willingness to dismiss foreclosure cases for good against the bank in the case of the inability to provide a custodian of the records to provide proof of payments or lack thereof, how the records were kept, whether they were kept in the ordinary course of business, etc..

If these decisions stand (at the writing of this there is approximately 30 days for the banks to file a motion for a rehearing), they could favor of homeowners by requiring banks to provide the actual custodian of the records (which presumably they should have been doing in the first place).

OCWEN Financial Corp., the largest non-bank mortgage-servicing company, Backdated Letters with Deadlines for Homeowners. A mortgage servicing company collects mortgage payments on behalf of a bank. Banks have been getting out of the mortgage servicing industry and selling the rights to service loans to companies like OCWEN.

New York’s superintendent of financial services, Benjamin Lawsky, claims that OCWEN has been sending letters to homeowner with due dates for action that have had expired months prior. Many of the letters informed homeowners that their loan modifications had been denied and that they had 30 days to appeal the denial. However, by the time the homeowner received the letter, the 30 day period had already past. Mr. Lawsky called this problem “pervasive”. This of course also raises questions concerning other loan servicer’s practices. According to Mr. Lawsky, “potentially hundreds of thousands” of back dated letters were sent to homeowners. OCWEN’s initial claim was that the errors were caused by software errors in their system and that their goal is “to avoid foreclosure”.

This is the 6th time in two years that Mr. Lawsky’s office has questioned OCWEN’s business practices, usually concerning actions taken or not taken with respect to homeowner’s facing foreclosure and/or engaged in mortgage loan modification. Further, Mr. Lawsky’s office in February stopped OCWEN’s proposed acquisition of the right to act as servicer on $39 billion in mortgages from Wells Fargo.

OCWEN’s actions may also violate the December 2013 settlement it entered into with the Consumer Financial Protection Bureau and 49 state attorneys general whereby it agreed to a $2.1 billion consent order to settle allegations of unfair and deceptive practices, including denying loan modifications to homeowners who qualified for them and adding unauthorized default fees for “default-related services”.

Under the consent agreement, OCWEN is required to ensure that homeowners have 30 days to appeal to OCWEN to reconsider a denial of a mortgage loan modification.

This, again, raises the old concerns about servicers and banks claiming to not have received loan modification documents sent repeatedly by homeowners, denying mortgage loan modifications to homeowners who would have otherwise qualified, and making the process of applying for and obtaining a mortgage loan modification or principal reduction confusing and difficult.

What actions are taken against OCWEN remain to be seen, as well as what other regulatory oversight actions will be taken with respect to other mortgage loan servicers and banks.